Our Stock of the Week is NIO, Inc. (NIO). NIO designs, manufactures, and sells electric vehicles in China. One of its innovations is BaaS or Battery as a Service. This allows a buyer to purchase a car without the batteries, which cost about $10,000, and subscribe to a service for $142 which provides them with fresh batteries. Batteries are swapped out as needed, and there is no high replacement cost in the future. Batteries can be swapped in a matter of minutes and is a much faster process than recharging, which can take 75 minutes
Nio is also aggressively expanding. It opened a division in Norway and made its first shipment outside of China. It has further plans to expand in Europe. It is also building a new plant in China, which will double capacity to around 240,000 vehicles annually.
EV sales are booming in China. Both Tesla and Ford have indicated strong sales. Tesla’s Shanghai factory set a monthly production record in September, and it is likely that NIO also sees strong demand.
There are seven analysts that follow NIO, and all seven have to buy recommendations on the stock. The average price target is $62.44, which is 65% above the current price, around $37.71. Two weeks ago, Goldman Sachs raised its rating on the stock to ‘buy’ and reiterated its $56 target. Goldman’s analyst noted that the NIOs ET7 vehicle is a premium model and is strengthening its brand.
NIO is down about 30% since July and 42% since February in large part due to an unfavorable environment for Chinese stocks.
The stock has turned up off recent lows and is gaining some traction along with other China names. We are looking for a move over the 50-day simple moving average and a retest of the early September lows. Tesla is one of the strongest stocks in the market currently and should drive more interest in NIO.
As always, we would not chase the open on Monday but will trade aggressively into volatility. We will buy down to the highs hit on Thursday and would look to add on a strong close.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and will buy or sell at any time for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in NIO. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.